The Land Tenure Debate

Hernando de Soto Polar, a famous Peruvian economist, first suggested giving title to land as a way to use globalization to fight poverty at the most basic level in his book: The Other Path in 2000, and has since won international acclaim for his suggestion. Hernando de Soto himself explains the process best, using the simple analogy of an apple at a 2001 speech in Brussels:

“I hope by now you have noticed that I have an apple here on the desk. This apple is my apple. […] what makes this my apple is a consensus about its ownership. However, if we look closely at this apple, there is nothing on or in it that says it is mine. Nothing in the physical context of the apple gives us that information. A stolen apple and a legitimate apple both look the same. […] Nothing in the apple says whether I can pledge it, lend it, deposit it as a guarantee, use it as collateral, or whether I can export or import it or cut it up among partners. In other words, the commercial and social life of my apple is not determined by the apple itself, but rather from the rules which we establish among ourselves to allow the apple to be traded and be attributed with commercial and financial functions that allow it to be globalised. […] Globalisation as we know it today is only possible through law that provides rules and through neatly organised standards that provide information.”

De Soto estimates that there are millions of dollars trapped in what he calls ‘dead property’ around the world due to the fact that its owners do not have official title to their land. Over 80 percent of the assets owned by the poor in developing countries cannot enter the market because they have no legal representation, he claims (De Soto 2001). Through changing property law, he sees us overcoming these hurdles and connecting a further 4 billion people to the capitalist land markets of the world. Giving title to property, he argues, gives the poor leverage to change their ownerships into capital – collateral or credit, will stem development as they take on entrepreneurship and not stay trapped in their subsistence agriculture or other small livelihoods (De Soto 1986).

De Soto’s idea was revolutionary and captured the minds of many, but not everyone agreed that his solution would work in all cases. John Bruce questions whether just handing out titles to plots of land is necessarily going to help the poor, arguing that “Tenure change cannot create more land” (Bruce 1993). He explains that giving title to those who informally own the land is useful if there is a system in place to recognize that legal title, if it is carefully documented when the title to the land changes hands and if there is a market – i.e. a demand for the land which is being titled. If there is no one who wishes to buy the land, he argues, then it is not helpful to be able to legally sell it and banks will not be willing to give you credit for such undesirable collateral (Bruce 1993).

Speaking specifically of indigenous lands, he says that critics of indigenous tenure systems often fault the indigenous for being unwilling to recognize the sale of their land, or to make investments in the land which cannot be converted to liquid assets. He also notes problems with community-sanctioned land use; certain innovations may tie down land use for longer than is appropriate, destroying the ecological balance or disrupting the community commons (Bruce 1993).

Bruce argues against these critics, saying that: “The causes of insecurity are diverse, and many have little to do with the rules of indigenous systems. It may arise from the abuse of power by traditional land administrators in hierarchical systems, or from their ineffectiveness in enforcing rules in political or economic circumstances which have undermined their authority. Competition between ethnic groups, land grabbing by new elites, and such arbitrary government action as taking without compensation or granting concessions inconsistent with existing rights are emerging sources of insecurity of tenure that may prove in the long run more serious than deficiencies in the substantive rules of indigenous systems” (Bruce 1993).

*The following is an excerpt of a paper I wrote on the land tenure debate in Peruvian indigenous communities*

“Despite growing international pressure to recognize and protect the rights of indigenous communities, and the fact that Peru signed and ratified the ILO Convention 169 on the group rights of indigenous peoples, Peru made very little progress in these matters during the 1990s (Smith, et al. 2003). This was due mainly to the Fujimori government and the state’s non-interventionist neo-liberal stance – little attempt was made to protect the communities, focusing instead on individual land titling: exactly what Hernando de Soto had recommended (Smith, et al. 2003). Unfortunately, this was not in the indigenous communities’ best interests, because they generally had no individual rights to the land they were using – particularly in the case of the Machiguenga and other neglected Amazonian groups.

While de Soto’s arguments may hold true for urban slum dwellers and highland indigenous farmers, the jungle-dwelling Machiguenga and the island-constrained Taquileans had very different starting points and neither is an appropriate case for implementing de Soto’s theories in order to gain credit access.

The Taquileans already had title for their lands, but could not use it for collateral to gain credit access because of community consensus that non-Taquileans should not be landowners on the island of Taquile. In addition, Taquileans had already created their own access to capital due to their burgeoning tourist trade.

The Machiguenga on the other hand, had a strong desire for capital, but have two restrictions on gaining title to their lands for use as collateral: first, they require the use of a wide range of land for their traditional type of subsistence swidden-fallow horticulture, and secondly, as Bruce has pointed out, there needs to be a demand for the land before it is worth taking as collateral by banks, who manage the credit. The sustainable use of their forest reserves involves moving their dwelling and their field to a new location about every five years (Henrich 1997).

These constraints on the Machiguenga may change as more and more of them become involved with western-style labour markets and as the demand for the natural resource bases contained within their land (such as gold, timber, forest products, natural gas) increase. Then the Peruvian government may be faced with the dilemma of trying to reconcile the sale of precious nature reserves by the so-called conservationist indigenous groups, the Machiguenga among them, to resource extraction companies, with the fact that it is a simple and legal (currently) way for those indigenous people to advance their own development, and obtain the things that the westernized world sees as so desirable: health care, education, houses, electricity etc.

Alternatively, the individuals in the Machiguenga group may suffer because their community leaders are trying to freeze-frame their culture and way of life and if the land rights are communal, then individual actors are disempowered to make choices about their own futures because they can’t legally sell their land and go elsewhere.

Entirety of the above article written by Sarah Topps © April 14th 2009

If you are interested in reading more about Hernando de Soto’s work – read this interview with him by PBS.

**References:
Bruce, J. “Do indigenous tenure systems constrain agricultural development?” In Land in African Agrarian Systems, by T. Basset and D. (eds.) Crummey, 35-56. Madison: University of Wisconsin Press, 1993.
De Soto Polar, Hernando. “Most People Cannot Participate (Speech) .” Brussels, October 21, 2001.
De Soto, Hernando. The Other Path. Oxford: Blackwell Publishing, 1986.
Henrich, Joe. “Market Incorporation, Agricultural Change and Sustainability Among the Machiguenga Indians of the Peruvian Amazon.” Human Ecology 25, no. 2 (1997): 319-351.
Smith, Richard Chase, Mario Pariona, Ermeto Tuesta, and Margarita Benavides. “MAPPING THE PAST AND THE FUTURE: GEOMATICS AND INDIGENOUS TERRITORIES IN THE PERUVIAN AMAZON.” HUMAN ORGANIZATION 62, no. 4 (2003): 357 – 368.